Which of the Following Statements Is True Regarding an Intra-Entity

question 26

Multiple Choice

Which of the following statements is true regarding an intra-entity transfer of land?

• A) A loss is always recognized but a gain is deferred in a consolidated income statement.
• B) A loss and a gain are deferred until the land is sold to an outside party.
• C) A loss and a gain are always recognized in a consolidated income statement.
• D) A gain is always recognized but a loss is deferred in a consolidated income statement.
• E) Recognition of a gain or loss is deferred by adjusting stockholders' equity through comprehensive income.

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Definitions:

Direct Materials

Raw materials that are directly traceable and allocable to a finished product in the manufacturing process.

Direct Labor

Direct Labor involves the work of employees who are directly involved in the production of goods or services, considered a variable cost that changes with the level of output.

Variable Overhead

Costs that vary with the level of production output, such as utilities and materials, as opposed to fixed overhead costs.

Absorption Costing

A pricing approach that incorporates all costs of production, including direct materials, direct labor, and all manufacturing overheads, both variable and fixed, into the product's cost.